Crypto winter, which has produced a massive market correction on bitcoin and other cryptocurrency prices, may now extend the big chill on blockchain as well.
Beyond the rather convenient management consulting dismissals that blockchain hype has slipped into the valley of disillusionment, the world’s most resilient technology may face its first serious technological challenge with IBM’s announcement of commercially ready quantum computing.
While blockchain and distributed ledger technologies come in many shapes and sizes, proponents of the bitcoin blockchain and other public ledgers have long advocated for the property of resilience by design.
Some going as far as claiming that the bitcoin blockchain is unhackable by today’s technological standards, due in no small measure to the distributed, encrypted and consensus-driven mechanisms that require broad agreement among many systems to ledger a transaction. This “hardened” posture of blockchain has up until now and by today’s technological standards proven to be very resilient indeed. One study claimed that to hack the bitcoin blockchain was as likely as winning the Powerball lottery 9 times consecutively.
Those odds, which no betting person would wager on, have just received a considerable challenge with the advent commercially viable quantum competing as IBM introduces the first generation of the IBM Q System One – the q standing for qubit, which is the basic unit of quantum information.
The claims that true blockchains are unhackable or the more accurate designation hack resistant negates the reality that complex systems fail in complex ways.
This much is true especially when you countenance an evolving cyber risk landscape that is propelled by Moore’s law, as much as the miniaturization and commercialization of quantum computing is now a market reality – and several years ahead of schedule at that. Does this mean that blockchain is immediately more vulnerable and that people’s crypto hoards now face an additional peril beyond the ever-present risks in the space? The answer is a cautious no, at least for now.
Any would-be exploit of true blockchains or a large-scale crypto heist exploiting quantum computing, despite IBM’s announcement, can only be carried out by a nation state actor or a very determined enterprise with deep pockets and a lot of physical space. The 9 by 9 tower encasing IBM’s quantum computer hearkens to the mainframes of the early days of computing, which filled entire rooms. But as a first foray into the democratization of quantum computing, IBM has made a considerable first move.
This first version will of course continue to evolve apace with technological advancements and market adoption, which will then imply further miniaturization and, hence, proliferation of the computing power necessary to fall into nefarious hands. When this occurs, which may be as soon as 2020, true blockchain projects and large crypto nest eggs in the hands of even the most cyber mature digital asset custodians may face a hitherto unimaginable peril.
Just as 51% attacks where once considered improbable, the prospect of quantum computing power being arrayed against blockchain and the valuable treasures and truths they hold have now entered the realm of possibility, albeit remote. Blockchain technology, like cloud computing or that other foundational technology the internet before it, is very much in its infancy, despite bitcoin’s tenth anniversary.
Serious players, including IBM and other technology majors, are also evolving with blockchain and, critically, their management understanding of the underlying technology and how it can impact core functions of their business and the economy overall. To this end, blockchain’s evolution, efficiency and security are also not constants, but evolving at the rate of technology innovation as well.
One crucial item to remember about blockchain, like all other technologies in the digital transformation toolbox, is that it is not to be used in isolation or as a constant, no matter how permanent data may be on its records. Like the migration to cloud computing, which is a largely uninsured and risk-prone option, blockchain and advanced technologies are infinitely better and safer than many of the legacy, honey pot systems and databases used today.
These very legacy systems are easily broken by low-cost high-impact social engineering, phishing and targeted whaling scams, cyber extortion and comparatively unsophisticated ransomware attacks that do not require millions spent on quantum computing. So, despite IBM’s impressive foray into leveling the quantum computing playing field, blockchain advocates and digital change leaders need not worry for now.
They likely face greater risk from project selection and execution in educating their board rooms than from technological vulnerabilities.